Correlation Between Diageo PLC and Meiwu Technology
Can any of the company-specific risk be diversified away by investing in both Diageo PLC and Meiwu Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Diageo PLC and Meiwu Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diageo PLC ADR and Meiwu Technology Co, you can compare the effects of market volatilities on Diageo PLC and Meiwu Technology and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Diageo PLC with a short position of Meiwu Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and Meiwu Technology.
Diversification Opportunities for Diageo PLC and Meiwu Technology
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diageo and Meiwu is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR and Meiwu Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiwu Technology and Diageo PLC is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Diageo PLC ADR are associated (or correlated) with Meiwu Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiwu Technology has no effect on the direction of Diageo PLC i.e., Diageo PLC and Meiwu Technology go up and down completely randomly.
Pair Corralation between Diageo PLC and Meiwu Technology
Considering the 90-day investment horizon Diageo PLC ADR is expected to generate 0.15 times more return on investment than Meiwu Technology. However, Diageo PLC ADR is 6.74 times less risky than Meiwu Technology. It trades about -0.06 of its potential returns per unit of risk. Meiwu Technology Co is currently generating about -0.02 per unit of risk. If you would invest 13,322 in Diageo PLC ADR on November 28, 2024 and sell it today you would lose (2,332) from holding Diageo PLC ADR or give up 17.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diageo PLC ADR vs. Meiwu Technology Co
Performance |
| Timeline |
| Diageo PLC ADR |
| Meiwu Technology |
Diageo PLC and Meiwu Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diageo PLC and Meiwu Technology
The main advantage of trading using opposite Diageo PLC and Meiwu Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC position performs unexpectedly, Meiwu Technology can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Meiwu Technology will offset losses from the drop in Meiwu Technology's long position.| Diageo PLC vs. Brown Forman | Diageo PLC vs. MGP Ingredients | Diageo PLC vs. Brown Forman | Diageo PLC vs. Constellation Brands Class |
| Meiwu Technology vs. MOGU Inc | Meiwu Technology vs. iPower Inc | Meiwu Technology vs. Jeffs Brands | Meiwu Technology vs. Kidpik Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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